All Forum Posts by: Corey M.

I'm considering partnering with someone more experienced to do BRRRRs out of state. I have no experience in this, but I am liquid enough to potentially buy a house for cash, or at least secure a loan to buy a more expensive home. If I team up with someone who I've never met before off of BP, how do I protect my money from the partner taking it and running off? And once the place is being rented, how do I ensure I'm getting my cut, or that the partner isn't paying for repairs that are unnecessary, etc?

Hoe does this situation change if both people are money partners? I'm just worried about someone running off with a lot of money, which seems like an easy scam to pull when you're investing out of state. 

I did a cash out refi on my primary residence about 7 months ago.  My townhouse was appraised at $462/sq ft for 1406 sq ft. At the time, there was a recent sale in the building for a 1,539 sq/ft townhouse at $383/sq ft. Because of the quality of my place vs my neighbor, I received $79 sq/ft more.

I am trying to cash out refi again. To do so, I had to get a new appraisal.  There was a more recent sale in the building for an 1174 sq/ft townhouse, which provided a new comp. That place sold for $438 sq/ft ($55 more p/sq ft than the last comp in the bldg). But my appraisal came back at $409 sq/ft - a $53/sq ft drop from just 7 months ago.

When I asked the underwriter, I was told that the new sale (1174 sq ft place) killed the value of my townhouse. I told him this didn't make sense - the new sale went for $438 vs vs $383 p/sq ft comp available at the time of my last refi. If anything, my appraisal should've gone up. I asked how the latest sale could go for $55 more p/sq ft, but somehow my place is now worth $53 less p/sq ft.

The answer given was that my house had finishings on par with latest comp sale, and that an 1174 sq ft place will automatically have a higher p/sq ft since it's smaller. Thus, the latest sale considerably reduced the value of my house, to the tune of $75k. Does this ring true? That my place could really be worth almost $30 sq ft less than the most recent sale in the building just because it's bigger? And that the value of my appraisal should've dropped $53 from one made 7 months ago because of the most recent sale?

I tried calling the appraiser, but he completely blew me off and refused to discuss how he came to his results. He didn't even let me get two sentences out. All he said was "there is no way to justify your original appraisal of $462/sq ft with the most recent sale in the building. And this isn't the appropriate way of discussing this matter." I told him the underwriter and my loan officer said to call him, but he seemed baffled by that. It's frustrating when a professional does a job that I paid for but then refuses to discuss the results.

Any advice here?

I'm wondering how people find others to partner with? I have a full time job, but some liquidity to fund deals. How does one protect their investment when working with a stranger? And how does someone with money structure a deal with someone who's not? I assume it's a split heavily in favor of the person putting in the money, but then what motivates the other partner to do a good job?

Would love some feedback from those who've partnered before. 

Originally posted by @Stone Jin:

@Corey M. The sewer is the cities responsibility but from the sewer to the house is the home owners.  What year was the house built?  I've never done a home inspection where I wanted the drains scoped.  Just have the seller buy a warranty that covers that and you should be all set for a year.  

The home was built in the mid-80s.  There is a home warranty for one year, but what happens if a pipe or sewer line breaks in two years?  That would destroy my house and it's something I could've asked to be fixed for free before the purchase.

Originally posted by @Stone Jin:

@Corey M.  Generally scoping the pipes is out of scope for an inspector.  They'll run water down every drain and if it drains, they'll state the plumbing is working as intended.  You may hire a plumbing company to run the camera if you wish,  normally that costs around $200.  

I don't want to overkill on inspections, but does it make sense to hire someone to scope the pipes and then someone else to look at the sewers? Aren't the sewers public property?

Originally posted by @Stone Jin:

@Corey M.

Is it on Septic?  You may need that checked out.  Termites if it's a big deal in the area.  The general home inspector will check electrical and plumbing for you.

In your case, you may want to have a priest to an inspection as well to make sure theres no ghosts. 

Exorcisms are free with every purchase.

It is not on Septic, it's sewer. Should I be having someone look at that?

And re the plumbing, does a typical home inspector scope the pipes and such? How do they check the plumbing?

I'm buying a turnkey SFH directly across from a cemetery. Other than a general home inspection, what are the other specialized inspections that I need to have? Is there a difference between plumbing and sewer inspections? And do I need one or both of these?

I've noticed that some turnkey marketers, like Norada, are selling promissory notes with really high returns (12-16.7%). These interest rates seem too good to be true. Who would pay this much to borrow when interest rates are so low? And with no collateral, how can an investor feel comfortable the money will be returned (with interest, no less). 

I did P2P lending using Lending Club. If you chose their worst rated investments, you were expected to get 8-9% returns. In actuality, I put in about 15k and averaged 2.5% returns. 

So how does one get 12-16.7% with little risk? And if this is possible, why buy houses, which come with unpredictable tenants, capex costs, etc.? 

Originally posted by @Rhett Tullis:

i currently manage around 15 homes in the neighborhood for various owners.  while it can cash flow well there are more issues with homes being left in poor condition by their tenants there than some other areas.  i am also seeing prices go crazy there making it a bad return.

What do you mean my prices going crazy? Also, is there a reason people are leaving the homes in bad condition?

Originally posted by @Remington Lyman:

Originally posted by @Corey M.:

Originally posted by @Remington Lyman:

Originally posted by @Andrew Z.:

Hello All, I am looking to purchase a turn key property with a management company. I am looking at Ohio, Tenn, Texas, or the Kansas City area. Does anyone have a turn key/management company they recommend and some pros/cons of these different states. I am in California and out of state investing makes more financial sense, as well as California not being landlord friendly. Thanks

I recommend you skip the turnkey model and just create your own turnkey team. You can do this by developing your Core 4. The core 4 is David Greene’s strategy for long-distance and made up of a realtor, contractor, property manager, and lender. Once you have this team in place, you should be able to confidently invest in any market.

I've listened to the podcast on finding your "core 4," but I haven't heard any clear direction on how an OOS investor can find those people. I renovated my primary residence and had an impossible time trying to track down my contractor, who would disappear in the middle of the day, never finish on time, make excuses for everything. A six week project took six months. Now imagine dealing with that from thousands of miles away. Are you just supposed to reach out to people on BP and trust they're not scammers? I wish there were reputable BRRRRKeys out there who could help identify a house, let the investor pay for the reno while the brrrr key oversees the project, and then manages moving forward. Basically, a passive investment with more upside because you're not buying at retail. I'm surprised there aren't a number of companies out there like this. 

If it was easy to do it there would not be as much profit to be made. You need to connect with a good Realtor that is able to refer you other rockstars.

But if you are OOS, why would you be trusting random people's opinions? What happens when the realtor sells you a home and the contractor disappears, which - let's face it- a good portion do. If you're financing a place and you aren't keeping tabs on a contractor, you're going to bleed money. And you probably wouldn't even know you're in trouble since you're far away. It sounds like a recipe for a major headache, especially if you have a full time job.